Carolyn Leonnig and Steven Mufson of the Washington Post have been doing a superb job covering the Solyndra story. In this piece, they look at companies that turned down government loans because they knew they wouldn’t have a productive use for the money. Amazing. Here is a good sample from the article:
The Obama administration’s vaunted initiative to catalyze the U.S. clean-energy industry — under attack for betting half a billion dollars on the solar-panel manufacturer Solyndra, which closed last month — has become a case study of what can go wrong when a rigid government bureaucracy tries to play venture capitalist and jump-start a nascent, fast-changing market.
Schmidt concluded in early 2011 that the influx of inexpensive flat solar panels was undercutting his company’s year-old proposal to use a field of mirrors that concentrated sunlight on a thermal tower. Despite market changes, however, the terms of the federal loan guarantee wouldn’t let Solar Trust switch in midstream to flat panels. So Solar Trust sought private financing.
“We look at a lot of technologies, and I don’t care which one we build — I want to build the one that makes the most financial sense,” Schmidt said.
The inflexibility of the terms for Schmidt’s project was just one of the troubles that have plagued the Energy Department’s $38.5 billion loan-guarantee program from its beginning in 2009. Inundated with proposals, the small Energy Department loan office was initially overwhelmed, and companies complained that it was moving too slowly, not too quickly as has been alleged recently in the case of the now-bankrupt Solyndra.
While Chu was striving to get things moving, top White House economic officials, including Lawrence H. Summers, then director of the National Economic Council, doubted the government’s ability to shape a new industry, and some wanted to tighten up oversight by the Office of Management and Budget — even if that meant some guarantees would never be given out.
Meanwhile, tumbling prices for silicon and turmoil in the financial world were changing project assumptions faster than the bureaucracy could make decisions.